First-ever COP Trade Day explores ways to support clean technologies and sustainable finance
The first-ever Trade Day at the COP climate talks took place this year, with discussions centred on how trade can support technology transfers and international collaboration to help the world meet its 2030 climate targets.
International trade can help to scale up breakthrough clean technologies and increase investments in energy efficiency, delegates were told. This could be particularly important for decarbonizing global value chains by reducing scope 3 emissions from suppliers. Other areas of focus at the COP28 Trade Day included expanding the use of leveraged sustainable finance to make trade greener. Sustainable finance takes into account the environmental, social, and governance impact of the economic activity it will be funding, and it can help low-income countries unlock green investment opportunities, according to the World Bank.
There was also an announcement on Trade Policy Tools for Climate Action from the World Trade Organization (WTO), which co-hosted the Trade Day with partners including the United Nations Conference on Trade and Development and the World Economic Forum. The document covers 10 policy areas and shows how government measures can improve the flow of climate-friendly goods and services, decarbonize supply chains, and build resilience to extreme weather events and climate change.
The discussions come as trade flows face increasing impacts from extreme weather events and disruption caused by climate change, according to the International Monetary Fund (IMF). A drought is causing record-low water levels on the Panama Canal, leaving ships facing an extra six days on their transit times. Overall cargo flows through the canal are down by an estimated 14 million tonnes on the year – a drop of about 5%.
In terms of goods flows into and out of ports, this is having the biggest impact on the west coast of South America, in Central America and around the US Gulf of Mexico. But the effects are also being felt in Asia and Europe, and the situation is expected to continue dragging on trade for months.
Droughts, floods, storms, wildfires and other extreme events are becoming more frequent and more intense as the climate crisis intensifies, increasing the threat of disruption to international trade and damage to maritime infrastructure, the IMF says.
EU-Mercosur trade deal faces delays
A long-delayed trade treaty between the EU and the Mercosur bloc of South American nations has hit a further stumbling block with the cancellation of EU trade commissioner Valdis Dombrovskis’ trip to Brazil to finalize the agreement. The landmark trade deal has been more than two decades in the making, but has faced opposition from French President Emmanuel Macron over environmental targets and now looks unlikely to be completed this year, the Financial Times reports.
The recent change of government in Argentina has also impacted negotiations, as its new cabinet has to approve the deal, Reuters reports. But incoming foreign minister Diana Mondino says the government wants to get the EU-Mercosur deal agreed. An EU-Mercosur agreement was reached in 2019, but then failed to progress because of EU demands for commitments to reduce Amazon deforestation and tackle climate change.
The European Commission says negotiations remain “intense and constructive” and that progress has been made. Spain, which holds the six-month rotating EU presidency, still believes it can secure an agreement this year.
News in brief
A recovery is under way in global merchandise trade volumes following a recent slump, according to the WTO’s Goods Trade Barometer. The bounce back is largely driven by automobile sales and production, as well as trade in electronic components. However, mixed economic figures and rising geopolitical tensions mean a high degree of uncertainty remains about the near-term outlook, the WTO says.
Brussels could delay import tariffs on electric vehicles traded between the EU and UK by three years, following opposition from the automobile industry. It had planned to impose 10% tariffs on EVs from the start of 2024 if the majority of their battery content originated outside the EU or UK.
EU states have called for a rethink of a Brussels plan to impose a shipping emissions charge, saying the move risks directing maritime trade away from the bloc’s ports. Spain, Italy and five other EU member states have written a letter to the European Commission opposing shipping in the EU’s emissions trading scheme.
A cyberattack affected operations at various Australian container terminals for several days in November. The ports in Melbourne, Sydney, Brisbane and Perth are now back online following the event, which forced them to disconnect from the internet. Bulgaria saw a near 50% rise in foreign direct investment (FDI) inflows in January-September to $3.4 billion. Government incentives are making the country an attractive FDI destination for investors looking to open businesses, Investment Monitor says. The rise came as neighbouring Romania recorded a 43% drop in FDI inflows over the same period to around $5.5 billion.
More on international trade from Agenda
International trade has undergone significant transformations over the past few years, driven by innovations that enhance supply chain efficiency for governments and businesses. Here are five strategies for continuing to boost innovation in trade. Can a decades-old South-South trade deal help countries embrace sustainable development? The Global System of Trade Preferences trade deal aims to help developing countries achieve food security, clean energy and a circular economy. Here’s how. Bhutan has restarted its accession process to the World Trade Organization, aiming to graduate from its status as a least developed country. How could this trade pathway help Bhutan thrive as a developed country?
Source: World Economic Forum
